If the 30-year U.S. Treasury reaches 6%, it marks the beginning of the death spiral: Silicon Valley moguls warn, positive for Bitcoin and gold.

Written by: Billy Bambrough, Forbes Digital Assets

Translated by: AididiaoJP, Foresight News

Bitcoin surged earlier this month due to a sudden market "panic" sentiment, briefly spiking before recently showing clear signs of waning momentum. The price is still down about 40% from the October 2025 peak. Even with the world's largest asset manager, BlackRock, revealing that it has seen an unexpected shift, Bitcoin overall still appears weak in 2026.

Currently, traders are waiting for new changes that a Bitcoin ETF might bring and are refocusing on larger macro issues: Is the U.S. sliding into a debt "death spiral" of about $40 trillion? According to several investors and institutions quoted in the article, once this narrative heats up, the first beneficiaries may not be the U.S. Treasury bonds themselves, but Bitcoin and gold.

The U.S. debt crisis, as described in the Silicon Valley investment circle, is no longer just characterized as "too big," but has entered a self-reinforcing stage.

"6% is the beginning": Death spiral definition from the All In podcast

Tech investor Chamath Palihapitiya provided a rather straightforward threshold in his "All In" podcast co-hosted with Jason Calacanis, David Sacks, and David Friedberg:

"If you see the 30-year Treasury yield reach 6%, that is the beginning of the death spiral."

This statement is frequently quoted because it translates abstract fiscal risks into a price that the market can see daily. An increase in the 30-year Treasury yield means long-term capital becomes more expensive; for the U.S. federal government, which is already burdened with about $40 trillion of debt, an increase in financing costs by even a few basis points will magnify interest expenses into the trillions.

Friedberg expressed the problem more specifically. He warned that higher rates are about to make rolling over this $40 trillion debt even more difficult:

"The federal government has a problem: It must refinance $10 trillion of debt in the next 12 months. This debt is due soon. When the bonds mature, the principal must be repaid to the holders, and then the government has to return to the Treasury market to issue new bonds and borrow money to roll over... Now borrowing for the U.S. federal government is very expensive, due to ongoing inflation."

This is exactly the standard path of the "death spiral": deficits drive up the scale of bond issuance, issuance drives up yields, yields push up interest, and interest then further amplifies the deficit. Once the market starts to doubt whether the U.S. can roll over maturing debt at acceptable costs anymore, buyers will demand higher compensation, and the spiral will start turning on its own.

Basint intervenes to suppress yields, Druckenmiller immediately counters

Earlier this month, U.S. Treasury Secretary Scott Basint announced plans to intervene, attempting to lower bond yields and government borrowing costs. The news sent shockwaves through international markets. The Treasury's direct involvement to improve long-end liquidity was intended to "cool down" the Treasury market, but was immediately interpreted by some investors as a sign that the government is now concerned about borrowing being too expensive.

Billionaire investor Stanley Druckenmiller quickly retaliated. His core judgment is firm: only reducing government borrowing can truly and sustainably lower long-term bond yields. In other words, relying on technical interventions, buyback operations, or liquidity arrangements can at most offer temporary relief; it does not address the fundamental supply-demand imbalance.

Earlier this year, Druckenmiller also made a longer-term judgment: due to the continuously expanding approximately $40 trillion debt, the U.S. dollar will no longer be the world's reserve currency in 50 years, with its position potentially being replaced by Bitcoin or cryptocurrencies. He also emphasized that the approximately $1.8 trillion deficit must be addressed because "it is the only way to sustainably lower long-term bond yields."

On one hand, the Treasury is trying to push long-end rates down, while on the other, seasoned macro investors insist that "borrowing less is the right path." These two positions colliding will inherently strengthen the market's discussions about the dollar's credit and the supply-demand dynamics of U.S. Treasuries.

The numbers are hard to ignore: monthly deficit of $432 billion

Concerns are not merely verbal. U.S. Treasury data shows that the federal budget deficit in July reached $432 billion. According to Reuters, this is the largest monthly deficit since March 2021 and has pushed the budget gap for the fiscal year 2026 to approximately $1.8 trillion so far.

For traders, the damaging aspect of this data doesn't lie in "another month of losses," but in how it overlaps with the refinancing schedule: about $10 trillion in debt needs to be rolled over in the next 12 months, with rates positioned unfavorably for borrowers, and deficits continuously setting monthly records. Naturally, the market asks the next question—who will buy this much new debt, and how high a price will buyers demand?

Bitcoin saw a significant rebound in August, which the article attributes in part to rising concerns over the approximately $40 trillion debt. In other words, in this rally, in addition to ETF funds and trading sentiment, there is an older macro narrative at play: when fiat currency credit is damaged, funds tend to seek assets with a hard supply cap.

BlackRock's unexpected statement: Debt concerns benefit Bitcoin and gold

The most noted comment in the market came from BlackRock's head of crypto assets, Robert Mishnick, on CNBC:

"Debt and deficit levels are the main concerns of the market." He added that when these concerns return to the headlines, it often benefits "assets like Bitcoin and gold."

This is not just a slogan from the retail circle but rather a statement from the world's largest asset management firm's crypto business, placing Bitcoin and gold in the same category of "hedging against fiscal pressure." Earlier this month, Mishnick also referred to Bitcoin's recent decoupling from the stock market as "healthy," as it can serve as a diversification tool to hedge some "left-tail risk" in a portfolio.

Institutional holdings give weight to this statement. Since launching in early 2024, BlackRock's leading Bitcoin ETF has accumulated nearly 750,000 Bitcoins, worth close to $50 billion. For many traditional funds, purchasing Bitcoin no longer requires managing private keys themselves; an ETF channel turns "macro hedging" into a configurable product.

Simon-Peter Massabni, head of business development at XS.com, explained in an email why the market connects Treasury intervention with rising Bitcoin: Basint's measures aim to improve liquidity in the longer-term debt market and alleviate the pressure that has pushed Treasury yields to levels not seen in years.

"But some market participants interpret these measures as efforts to curb borrowing costs, reigniting concerns about potential depreciation of the dollar. This environment is favorable for Bitcoin—its supply cap of 21 million continues to strengthen its narrative as a scarce asset relative to fiat currency."

Thus, the logical chain is completed by the market: too large deficits → maturing debt needs rolling → high rates make rolling expensive → government intervenes to suppress yields → concerns arise about whether this is draining dollar credit → funds turn to gold and Bitcoin.

This time Bitcoin is included in "de-dollarization hedge," rather than merely a risk asset

The article wants to emphasize not just "Bitcoin has gone up," but that the pricing framework may be switching. In recent years, Bitcoin often rose and fell in tandem with U.S. stocks, especially high-risk tech stocks; once decoupled from the stock market, institutions see it as a hedging tool in a portfolio. Mishnick's so-called "healthy" refers to this shift in role.

Gold is not unfamiliar with this narrative. It has traditionally served as a hedge against currency devaluation and the erosion of sovereign credit. Bitcoin is brought up alongside it based on two factors: a fixed total supply of 21 million, and Wall Street has already incorporated it into mainstream accounts via ETFs. While BlackRock manages nearly 750,000 Bitcoins through its product, it publicly states that when debt and deficits return to the headlines, both Bitcoin and gold may benefit—this psychological impact on the market often outweighs a single analyst’s target price.

Of course, the original text does not provide an exact prediction that "Bitcoin will definitely rise to a certain price," nor does it claim that the death spiral has already been realized. It records a set of warming judgments: if the 30-year U.S. Treasury approaches 6%, Silicon Valley investors believe the spiral begins; about $10 trillion in refinancing over the next year makes it easier for interest and deficits to bite into each other; Treasury intervention sparks controversy over "whether we are preserving financing costs"; and BlackRock connects this macro line directly to Bitcoin and gold.

For Chinese readers, the core of this news lies not in the sensational words in the headline but in the three sets of numbers that have been presented: approximately $40 trillion in debt stock, about $10 trillion in refinancing over the next 12 months, and a monthly deficit of $432 billion in July, with a fiscal year-to-date deficit of about $1.8 trillion. As long as these three sets of numbers continue to deteriorate, the narrative of Bitcoin and gold as "scarce assets" will repeatedly be revived by institutions.

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